Stock exchange confused as sole bid too high

KATHMANDU, DEC 02 -

The Nepal Stock Exchange (Nepse) is likely to have a hard time finding an appropriate consultant for its automation project as the sole bidder, International Securities Consultancy (ISC) of Hong Kong, quoted a price much higher than its estimate.

The company has quoted a price of $264,000 which Nepse General Manager Sitaram Thapaliya said was “much higher than our estimate”.

Nepal’s only share market is currently bargaining with ISC and hopes to be able to bring down the price within a week. “We have to bring the consultancy fee to our estimate during the negotiation,” said Thapaliya. “Otherwise, the bidding process will have to be cancelled as per the Public Procurement Act.”

He added that Nepse would award the contract to ISC only if it agrees to work within the estimated budget because it is the only bidder. In June, Nepse had invited expressions of interest from prospective bidders and short listed three firms from among the 10 that applied. The two other firms, Korea Exchange and Daiwa Securities of Japan, pulled out of the race putting Nepse in a difficult position.

“Since they are also big software vendors, they may have withdrawn to be able to compete when Nepse invites bids for the software later,” said Thapaliya. The firm that wins the consultancy contract will not be allowed to bid for the software. The consultant will have to recommend whether Nepse should upgrade the current system or replace it with a new one, say what type of system is necessary, prepare a business plan and scrutinize the current legal provisions for weaknesses to automate Nepse. Although the previous manual system of stock trading was replaced by an online system a few years ago, it is yet to be fully automated.

According to Nepse, investors still have to visit the stockbrokers personally to do the paperwork related to registering buying and selling orders. Similarly, stockbrokers also need to settle the transactions manually.

The present system only allows stock to be traded electronically. The rest of the process has to be done manually. After the proposed automation system is implemented, investors will not have to visit the concerned stockbrokers even to book their buying and selling orders, said Nepse.

SOurce: The Kathmandu Post